The document summarizes key concepts of macroeconomics including the circular flow model. The circular flow model shows how money flows between households and firms through factor payments and the purchase of goods and services. Firms utilize resources from households like labor, capital, land and entrepreneurship to produce goods and services. This generates income for households which they can use to purchase goods and services from firms. There are also inflows and outflows in the circular flow from sectors like government, investment, exports and imports that affect income and spending in the economy. The circular flow framework helps explain the interdependence between production and consumption in the macroeconomy.

1. Macroeconomics Week 4

2. CIRCULAR FLOW DIAGRAM is a visual model of the economy that shows how money flows through markets among households and firms.

4. Labor (labor)

5. Capital (interest) ; and

8. HOUSEHOLDS are resource owners (land, labor, capital, entrepreneurship)

11. Concept of Value Added: For each stage in the production process adds to the value of the final product.

13. 9 of 46 5-SECTOR CIRCULAR FLOW EXPORTS (X) GOVERNMENT SPENDING (G) INVESTMENT (I) BANKS GOVERNMENT REST OF THE WORLD SAVINGS (S) TAXES (T) IMPORTS (M) INFLOWS: Investment (I), Government Spending (G), and Exports (X) S + T + M = I + G + X or OUTFLOWS = INFLOWS OUTFLOWS: Savings (S), Taxes (T), and Imports (M)